Southwest Airlines Reports Q3 2026 Results: Record Revenue and FY26 Guidance

Executive Summary

On October 21, 2026, Southwest Airlines Co. filed a Current Report on Form 8-K under Item 2.02 (Results of Operations and Financial Condition), furnishing its financial results for the third quarter ended September 30, 2026.

Third Quarter 2026 Financial Results

• Operating Revenue: Generated $8.42 billion, up 21.2% year-over-year compared to $6.95 billion in Q3 2025, driven by record passenger revenue of $7.75 billion (+22.8% YoY).
• Net Income & EPS: GAAP net income reached $270 million ($0.55 per diluted share). Non-GAAP adjusted net income stood at $328 million ($0.66 adjusted EPS).
• Unit Economics: RASM (revenue per available seat mile) grew 21.6% YoY on a 0.4% decline in capacity (ASMs).
• Operating Expenses & Fuel Impact: Operating expenses rose 16.3% YoY to $8.0 billion, primarily driven by higher nominal fuel expenses, which jumped $821 million YoY to $2.15 billion ($3.92 per gallon). CASM-X rose 3.8% YoY.
• Margins: Operating margin reached 4.5% (up 4.0 percentage points YoY), while adjusted operating margin reached 5.4% (up 4.8 percentage points YoY).

Guidance and Outlook

• Q4 2026 Outlook:
  • Adjusted EPS: $0.55 to $0.80.
  • Capacity (ASMs): +3% to +4% YoY.
  • Unit Revenue (RASM): +19% to +21% YoY.
  • CASM-X: +4.0% to +4.5% YoY (includes ~1.0 point headwind from removing six seats on 737-700s for extra legroom seating).
  • Fuel Cost: Assumed at ~$4.55 per gallon.
• Full-Year 2026 Outlook:
  • Adjusted EPS: $2.60 to $2.85.
  • Full-Year Capacity Growth: ~1.2%.
  • Net Capital Expenditures: $2.5 billion to $2.75 billion.

Balance Sheet & Capital Allocation

• Total liquidity ended the quarter at $5.6 billion ($3.6 billion cash/cash equivalents plus $2.0 billion undrawn revolving credit facility).
• Gross leverage stood at 1.9x with $15.8 billion in net book value of unencumbered aircraft and related assets.
• Distributed $176 million in shareholder dividends during Q3 2026; $450 million remains under the authorized $2.0 billion share repurchase plan.